The Federal Communications Commission (FCC) today fined a North Carolina
telecom holding company $15,000 for blocking Voice over IP
calls to their customers.

In addition to the fine, Madison River Communications of Mebane, N.C.,
agreed to refrain from blocking VoIP traffic and to put measures into place
to ensure that such blocking won't happen again.

"We saw a problem, and we acted swiftly to ensure that Internet voice
service remains a viable option for consumers," outgoing FCC Chairman Michael K.
Powell said in a statement. "The industry must adhere to certain consumer
protection norms if the Internet is to remain an open platform for
innovation."

The FCC action came after VoIP providers Vonage and Nuvio complained to the
agency broadband providers are blocking or degrading their Internet telephony services. In public comments, neither Vonage nor Nuvio named the providers blocking their traffic.

Madison River was founded in 1996 to acquire local telephone companies in
small markets. The firm owns and operates four rural telephone companies in
Georgia, Alabama, North Carolina and Illinois. Executives did not return
calls at press time for comment on the fine.

In a Sept. 13 letter to the FCC, Kansas City VoIP wholesaler Nuvio argued
that broadband providers have an economic incentive to discriminate against
unaffiliated VoIP providers since the providers have the ability to control
the quality of VoIP calls.

"This raises the possibility that a broadband provider that also offers VoIP
service may discriminate against unaffiliated VoIP providers in order to
increase its overall profits and retain market share," the letter states.

In February, Edison, N.J.-based Vonage confirmed it had met with the FCC
about the same problem, but stressed it filed no formal complaint.
Both Vonage and Nuvio told internetnews.com that the companies
blocking VoIP calls are setting a dangerous precedence for all IP-based
services.

"It's the largest issue facing VoIP and all other IP services," Jason
Talley, president and CEO of Nuvio, said in February. "What's next? E-mail
that doesn't use your provider? Instant messaging? If you purchase broadband access, you should be able to use the applications that run over it."

Vonage Senior Vice President Brooke Schulz added, "It's really about
consumer protection. People and the Internet should not be infringed upon by
last-mile providers. The whole principal of buying [broadband] service is
being infringed upon."

Talley said broadband providers have three ways to block VoIP calls: blocking the user's actual port at the consumer premises; blocking traffic from a registered service; and selectively and randomly degrading service or introducing latency.